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RNRL Claims Victory

BW Online Bureau Nov 08, 2014

<?xml version="1.0" encoding="UTF-8"?><root available-locales="en_US," default-locale="en_US"><static-content language-id="en_US"><![CDATA[(Reuters) In what is seen as a major victory for Anil Ambani engaged in one of the most fiercely fought corporate battles, the Bombay High Court today asked elder brother Mukesh's RIL to supply gas from the KG basin at $ 2.34 MBTU (One Million British Thermal Units per hour ) to the former's group firm. Asking the Reliance Industries to enter into a fresh "suitable agreement" within a month, a division bench of Justices J N Patel and K K Tated said that the new agreement should be as per the Memorandum of Understanding (MoU) between the Ambani brothers Mukesh and Anil. The gas supply had become a bone of contention between the two brothers after they signed a family settlement agreement in June 2005 ending a bitter battle over the division of Reliance empire. RNRL had moved the court alleging that the gas supply pact was signed when the concerned companies were under the ownership of Mukesh Ambani group and was contrary to the family settlement that was mediated by mother Kokilaben. "Prima facie it looks like we have won," said RNRL lawyer Mahesh Jethmalani. RIL lawyer Milind Sathe said though the new agreement will have to be as per the MoU, he would be able to comment on the verdict after seeing the full order. Filing appeal in Supreme is one option, he added. The spokespersons for both Anil and Mukesh groups declined to commet on the judgement The Bombay High Court directed Reliance Industries to supply gas to a former group firm at about half the government-approved price, sending its shares sliding more than 7 percent. The Bombay High Court on Monday asked Reliance to supply 28 million metric cubic metres a day for 17 years at $2.34 per million metric British thermal unit to Reliance Natural Resources, Mahesh Jethmalani, a lawyer for Reliance Natural, said. On Jan. 30, the court had issued an interim order saying Reliance Industries was allowed to sell gas at government- approved price of $4.2 per million metric British thermal units from its KG-D6 block in the Krishna Godavari basin, off eastern India. Reliance Industries, India's biggest listed conglomerate, is controlled by billionaire Mukesh Ambani while Reliance Natural, engaged in sourcing, supply and transportation of gas, coal and liquid fuels, is headed by estranged younger brother Anil Ambani. The two firms were contesting details in a supply contract that was originally agreed when the Reliance empire split in 2005. "Within one month's time we have to enter into an agreement," Jethmalani said. A Reliance Industries spokesman said the company would comment only after studying the judgment. "Reliance Industries will have to supply gas at a rate lower than the rate fixed by the government. They are going to incur a lower profit for that much amount," said D.D. Sharma, vice president at Anand Rathi Securities. Shares in Reliance Industries, which has a market value of $78 billion, were down 6.8 percent at 2,195.80 rupees by 0752 GMT, having fallen as much as 7.4 percent earlier. It dragged the main Mumbai index down 1.7 percent. Prayesh Jain, an analyst with India Infoline, said the ruling would have a negative impact of around 120 rupees per share for Reliance Industries. "With this information, sentiment has become weak for Reliance (Industries ) right now." Shares in Reliance Natural Resources were up 25.1 percent at 109.20 rupees. The stock was the index's mostly heavily traded by volume. The judgment gains importance as it arrives only two months after Reliance Industries started pumping natural gas from its massive deep-sea field, which at full throttle will nearly double India's gas output. The company started pumping 2.5 mmscmd gas from the field in early April, and is expected to reach a peak production of 80 mmscmd before December. Reliance Industries agreed to sell 11 mmscmd gas from the KG basin to power companies in late April and 15 mmscmd to fertilizer companies in late March. Reliance Industries has a 90 percent interest in the block, while Canada's Niko Resources holds the rest. (Agencies)